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IoD says Government must accept findings of IR35 review
Posted Oct 25, 2010
The Institute of Directors says that the Government must accept the results of the IR35 review when they appear, to prove that they are fully committed to simplifying the tax system.
The IoD has welcomed the news that the Office of Tax Simplification (OTS) has begun reviewing IR35 as part of its task to simplify the way small businesses are taxed, however the organisation says that the Government must accept any recommendations the OTS makes when it delivers its report - or give good reasons for rejecting them.
The directors' organisation says that IR35 needs to be simplified.
Following its introduction in 2000 as a "solution", the IoD says that "...it has itself become the problem. It burdens business people with lengthy tax investigations that very often produce no result for the Revenue. It applies vague criteria, so neither business people nor the Revenue can predict the outcome of an investigation, even once all of the facts are known."
Any new tests to determine employment status and tax liabilities must be applied mechanically, without any vagueness.
The IoD also suggests that there should be an initial screening test to remove as many people from IR35's successor as possible, before detailed tests are needed.
Following its own submission to the OTS, Richard Baron, Head of Taxation at the IoD said:
"The Office of Tax Simplification is very well-placed to come up with something better than the current dog's dinner of IR35. It has both the expertise, and the necessary remit to take the views of outsiders.
"The real challenge will be for the Government. Will it show that it means business about tax simplification, by accepting the Office's recommendations when they appear or giving a watertight reason for rejecting them? The Office should not pull its punches. It should make a strong case for its preferred solution, and put Ministers on the spot."
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